American borrowers leaning on cards as wait for rate cuts continues
Americans across the credit rating spectrum are driving up credit card balances and utilization as they feel the pinch from the higher cost of living.
As the wait goes on for the Federal Reserve to ease off the gas and cut interest rates, especially for those paying higher monthly mortgage payments, using available credit on existing credit cards is offering some relief.
TransUnion’s latest Quarterly Credit Insights Report for the second quarter of 2024 shows that bank card balances grew 4.8% year-over-year led by subprime at 12.3% growth, although all risk tiers saw growth.
Meanwhile card originations were down 7% year-over-year in the first quarter of 2024 (the most recent period with available data) although there was growth for the super prime segment.
For other credit products, unsecured personal loan balance growth continued in the second quarter, although at a slower pace of 6%, down from the double-digit growth seen at its peak during the seven consecutive quarters of increases. There were also more originations for these loans, which saw year-over-year growth for the first time in five quarters in Q1 2024 (the most recent quarter for which originations data are available).
Auto loans recorded lower originations (except for super prime borrowers) but balances were up 2.7% year-over-year. Mortgage originations saw year-over-year growth in Q1 2024, the first YoY growth since 2021.
“Consumers across the board continue to engage with a wide range of credit products, with continued balance growth across credit risk tiers. Lower risk super prime, in particular, originated more this quarter in areas such as credit cards and auto,” said Michele Raneri, vice president and head of U.S. research and consulting at
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